Pharos Energy inks Egypt farmout deal; production drops in first half

(Alliance News) - Pharos Energy PLC unveiled on Wednesday the farmout of two of its Egyptian ...

Alliance News 15 September, 2021 | 1:17PM
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(Alliance News) - Pharos Energy PLC unveiled on Wednesday the farmout of two of its Egyptian concessions, as the oil and gas company noted a drop in production in the first half of 2021.

London-based Pharos said it has struck a USD115 million farmout agreement for its Egyptian El Fayum and North Beni Suef concessions to IPR Lake Qarun Petroleum Co, which will sell a 55% interest in each concession.

Through the transaction, Pharos will get USD5 million in cash at completion, USD38.4 million to fund its interest in future activities costs and a contingent consideration of around USD20 million, dependent on Brent oil prices per annum from 2022 to 2025.

IPR Lake Qarun Petroleum Co is a fully owned subsidiary of IPR Energy AG, a London-based petroleum company with offices in Cairo and Islamabad.

The proposed transaction will give IPR a 55% working interest and operatorship in the two onshore concessions.

"The farmout, while instantly boosting our balance sheet, will allow the entry of a partner who has committed to carry Pharos on a capital programme on these Egyptian assets, which will in turn lead to increased production, helping to fulfil the full potential of the concessions," commented Chief Executive Ed Story.

Shares in Pharos were up 5.8% at 20.10 pence in London on Wednesday afternoon.

For the six months to June 30, Pharos' swung to a pretax profit of USD26.7 million from a loss of USD317.9 million in the same period last year. However, revenue dropped to USD59.2 million from USD80.1 million.

Production in the period slipped to 9,147 barrels of oil equivalent per day, compared to 12,093 barrels year-on-year.

Consequently, Pharos dropped its production forecasts to between 8,700 and 9,500 barrels of oil equivalent per day, from between 9,200 and 10,600 barrels.

Pharos declared no interim dividend, citing cash resources and continuing "uncertainty in the macro environment".

Looking ahead, the company hopes to return to free cash flow in the medium term.

"The signing of the Egyptian farm-out and the infill development programme in Vietnam means that the medium term outlook for the company is a return to free cash flow and ultimately to distributions to shareholders," Story added.

By Josie O'Brien; josieobrien@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Pharos Energy PLC 23.10 GBX -1.28 -

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